Is Blackwater Too Big to Fail?

from Mother Jones

— By Daniel Schulman | Fri August 21, 2009 8:14 AM PST

—Photo by Flickr user James Gordon.

Erik Prince's security enterprise has a division for pretty much everything. Need planes or choppers? See Aviation Worldwide or Presidential Airways. A compliment of Colombian mercs? Greystone at your service. For-hire spooks? Total Intelligence Solutions—emphasis on total—is standing by. And for the super-double-secret covert work—the kind that the CIA keeps even Congress in the dark about—Prince has a division for that too. According to the New York Times, it's called Blackwater Select.

Building on its scoop that the company played a role in the CIA's abandoned program to assassinate Al Qaeda operatives, the Times reports today that this secret division also plays a part in the agency's predator drone program.

The division’s operations are carried out at hidden bases in Pakistan and Afghanistan, where the company’s contractors assemble and load Hellfire missiles and 500-pound laser-guided bombs on remotely piloted Predator aircraft, work previously performed by employees of the Central Intelligence Agency. They also provide security at the covert bases, the officials said.

The role of the company in the Predator program highlights the degree to which the C.I.A. now depends on outside contractors to perform some of the agency’s most important assignments. And it illustrates the resilience of Blackwater, now known as Xe (pronounced Zee) Services, though most people in and outside the company still refer to it as Blackwater. It has grown through government work, even as it attracted criticism and allegations of brutality in Iraq.

In light of these accusations and controversies one would think that Prince's government clients would tire of the enduring PR nightmare and cut their ties. But they won't, because they can't. By many, the company is viewed as indispensable. This didn't happen by accident. It's long been Prince's business model. "Make yourself indispensable to the client, and you'll always have work," Prince is quoted as saying in Suzanne Simons' new book, Master of War.

Certainly the company didn't rise up from its modest origins to become a contracting behemoth without a lot of help. That is, if the company is indispensable, that's largely because we made it that way. The more jobs the government contracts out to Blackwater (and other industry players), the more the government loses the internal capacity to do them itself. Think of it this way: Blackwater operators were originally trained by the government to carry out the drone work. If the government decides it wants to assume this role again one day, will its personnel need to be trained by Blackwater?

It's not just about outsourcing—it's the kind of jobs that are being outsourced to Blackwater that raise questions. Writing in Time, ex-CIA officer Robert Baer points out:

It's one thing, albeit often misguided, for the agency to outsource certain tasks to contractors. It's quite another to involve a company like Blackwater in even the planning and training of targeted killings, akin to the CIA going to the mafia to draw up a plan to kill Castro.

I suspect that if the agreements are ever really looked into — rather than a formal contract, the CIA reportedly brokered individual deals with top company brass — we will find out that Blackwater's assassination work was more about bilking the U.S. taxpayer than it was killing Osama bin Laden or other al-Qaeda leaders. More than a few senior CIA officers retired from the CIA and went to work at Blackwater, the controversial private security shop now known as Xe Services. Not only did those officers presumably take their CIA Rolodexes with them out the door, but many probably didn't choose to leave until they had a lucrative new contract lined up. But more to the point, Blackwater stood no better chance of placing operatives in Pakistan's tribal areas, where the al-Qaeda leadership was hiding in 2004, than the CIA or the U.S. military did.

Still, whether by virtue of Blackwater's revolving door relationship with the CIA, or the agency's own manpower shortages, the company has now been entrusted with some of the intelligence community's most senstive work. Thanks to the Times, we now know more details about Blackwater's CIA work, but this likely represents a fraction of the covert contracts (or handshake agreements, as the case may be) the company and its affiliates have undertaken for the agency. Add in the many non-secret jobs these companies perform for the government, and it becomes hard to imagine the Obama administration extricating itself from its inherited relationship with Prince's companies even if it wanted to. In some ways, Prince's operation is the military world version of AIG—too big to fail.

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